Canada: ABCA Cements Limitation Period For Third Party Contribution Claims And Weighs In On Still Unsettled Test For Summary Dismissal

There has been a longstanding dispute, or at least uncertainty, about the limitation period for third party claims for contribution in Alberta stemming back over 40 years or so, despite numerous efforts of the courts and the Alberta legislature to remedy it. The judgment in Whitecourt Power Limited Partnership v Elliott Turbomachinery Canada Inc, has ended all uncertainty, hopefully for good. This decision affects litigation of all variety and is very important as it provides firm confirmation of the limitation period for third party claims for contribution, which are common and important to many actions.

The Court in this case also provided brief comments on the proper test for summary dismissal, noted to be a "still somewhat unsettled" area of the law. However, it is an area of increasing importance as both parties and the courts turn more and more frequently to summary judgment to bring a faster and cheaper conclusion to lawsuits without having to go through a full trial.

Background and Decision Below

The plaintiff, Whitecourt Power Limited Partnership ("Whitecourt"), is the owner of a generator at an electrical generating plant in Northern Alberta. Whitecourt hired the defendant Interpro Technical Services Ltd. ("Interpro") to carry out a scheduled overhaul of its generator. In connection with that, Elliott Turbomachinery Canada Inc. ("Elliott") was retained to clean and balance the turbine rotor (a significant component of the generator). After the overhaul, Whitecourt noticed a serious vibration problem and eventually issued its claim against Interpro for ~$6.7 million in damages alleged to have been suffered as a result of Interpro's overhaul of the generator.

In its defence, Interpro alleged that some of the work was performed by other contractors, including Elliott. Interpro issued a third party claim against Elliott, claiming mainly contribution at common law and under the Tort-feasors Act, RSA 2000, c T-5 ("TFA"), and also for breach of an alleged independent duty of care. Elliott applied to set aside the third party claim because it was filed out of time or, alternatively, for summary dismissal of the third party claim. The Master and the Queen's Bench judge were not persuaded to set aside or summarily dismiss the third party claim. Elliott appealed.

The Limitation Period for Third Party Claims for Contribution – The Final Chapter

In considering whether the claim for contribution under the TFA was time-barred, the Court noted the recent amendments which had been made to the Limitations Act, RSA 2000, c L-12. Those amendments had come into force on Dec. 17, 2014 (although, they were made retroactive to 1999) and expressly and purposefully clarified when the discovery limitations period begins for a claim for contribution under the TFA. The Court quoted Hansard to highlight that the clarifications had been brought forward by the Law Society, which had worked with members of the Alberta bar on the wording of the amendments.

The Court confirmed that the Limitations Act now clarifies that defendants have two years from the later of the date when served with the statement of claim and discoverability to seek contribution and indemnity from other third party tort-feasors. The Court held that the amendments now make it clear who, as between the plaintiff and the defendant, "ought to have known" that the third party was jointly liable for the claimant's injury in order to satisfy the discoverability requirements under the Limitations Act – the defendant.

To be even more precise, the Court confirmed that expiration of the limitation period as between the plaintiff and the third party no longer prevents the defendant from claiming contribution from another tort-feasor under the TFA. This, consequently, seems to finally put to bed the issue of the "late-suing plaintiff", and the long history of this issue, as described in Dean v Kociniak, 2001 ABQB 412 ("Dean"). That was a problem which arose for defendant tort-feasors when plaintiffs sued very late in the limitation period, meaning that the defendant may not find out about the claim and be in a position to advance a claim for contribution until the limitation period had already expired.

The Court further confirmed that the earliest possible date that the limitations period can begin is the date of service of the statement of claim, absent a right of contribution independent of the claimant's suit (which did not arise in this particular case). Further, that there "must be circumstances when the discoverability limitation period post-dates service of the statement of claim" (at para. 41). The Court found this would be the case with respect to discoverability of both statutory and common law claims for contribution (at para. 42).

The Court rather delicately stated (at para. 36) that the amendments made to the Limitation Act "overcome the difficulties addressed by this court in Howalta and in Arcelormittal Tubular Products Roman SA v Fluor Canada Ltd, 2013 ABCA 279 (CanLII), 556 AR 188, and state the law as it was interpreted in Dean per Slatter J (as he then was)" [emphasis added]. Given that the decision in the Arcelormittal Tubular case was issued in August 2013 and given that, in it, the ABCA held (effectively) the opposite of what was clarified by the new amendments and the law as it was interpreted in Dean, it is clear that the Alberta legislature acted relatively swiftly to correct the prior erroneous decision of the ABCA on this point.

In this case, since discoverability is largely a question of fact, the issue of knowledge of the existence of a claim warranting a third party claim for contribution was an issue of merit which required a trial so summary dismissal was not appropriate.

The Test for Summary Judgment – Expanded by Hryniak

In reviewing the lower courts' decision on Elliott's application for summary dismissal of the third party claim against it, the ABCA commented on the proper approach to summary judgment. The Court noted that the application of Hryniak v Mauldin, 2014 SCC 7, in Alberta was "still somewhat unsettled" (at para. 11). Then the Court adopted the expanded formulation of the test as stated in Hyrniak, as had been adopted in the prior decision of the ABCA in Ostrowercha, over the more restrictive formulation of the test as stated by the ABCA in Amack v Wishewan (see our previous blog posting on this topic here, entitled "Melting Pot or Mosaic? The Ongoing Culture Shift since Hryniak").

The Court also touched on the issue of the extent of fact-finding powers of the court in summary judgment applications, noting the view of the Master was that summary judgment could not be granted in Alberta if there were conflicting affidavits. However, the Court appeared to support the broader view of the Chambers Judge, finding that she "appreciated that the court was not as restricted in its fact findings as the Master had suggested" [emphasis added] (para. 11). We are sure to hear more on this issue; some authorities suggest that legislative change is needed "so that the sun that rose in the east with Hryniak" does not "set in the west" due to such evidentiary issues: Rai v 1294477 Alberta Ltd, 2015 ABQB 349, at para. 13.

In this case, the Court found no reviewable error in the findings of the Chambers Judge that there were issues going beyond the courts' ability to determine in summary form and that a fair and reasonable adjudication was not possible in the circumstances – complex litigation where there were contract and tort claims, multiple parties and no written contract.

Case Information

Whitecourt Power Limited Parntership v Elliott Turbomachinery Canada Inc, 2015 ABCA 252, per Paperny and Rowbotham JJ.A. and Eidsvik J., on appeal from an Order of Nation J.

Date of Decision: July 24, 2015

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